07 November 2011 By James Roberts

Madrid office rental rates 'continue to fall'

The latest figures examining the state of the office market in Madrid do not paint a particularly positive picture.

According to the findings from Savills, rents dropped further during the second quarter of this year, with the organisation noting that a "lack of confidence in the future of Spain's economy" is weighing on its commercial sector.

Meanwhile, prime market yields appear to have plateaued at around five per cent, the firm added.

Savills also pointed out that supply of office premises is currently much higher than demand, which is helping to push rents lower.

On a more positive note, the report showed that vacancy rates fell slightly during the second quarter of 2011, compared to the end of 2010.

However, a recent survey by Cushman & Wakefield revealed that despite investment activity in Europe rising overall during three months from July to September this year, the Spanish commercial property sector did not follow this trend.

In fact, the report found that the volume of transactions conducted in Spain during this period dropped by 46 per cent compared to the previous quarter.